By Atom MarkarianThe International Monetary Fund completed on Thursday a three-year lending program designed to sustain macroeconomic stability in Armenia with the disbursement of its final $13.7 million installment.
The release of the sixth tranche of the $105.3 million Poverty Reduction and Growth Facility (PRGF) was announced by Armenian Finance Minister Vartan Khachatrian and Kames McHugh, the IMF representative in Yerevan. It was formally approved by the fund's governing board in Washington the previous night.
The PRGF funds, first made available in May 2001, have been used by the Armenian Central Bank to maintain a stable exchange rate of the national currency, the dram, and alleviate the country's negative balance of payments. IMF officials said the scheme has served its purpose, praising the Armenian government for pursuing strict fiscal and monetary policies and reforming loss-making public utilities.
The IMF's deputy executive director, Augustin Carstens, said in a statement that this "prudent" policy was key to a double-digit economic growth registered by the Armenian authorities last year. He urged them to stay the course.
"This commitment to good economic policies has now started to bear results," McHugh told reporters in Yerevan. "Armenia now enjoys high economic growth, poverty indicators are starting to fall and living standards are beginning to rise."
The IMF statement cautioned at the same time that Armenia's continued economic recovery is contingent on better governance. It noted in particular that the authorities must eliminate "arbitrary practices" in the collection of taxes and import duties -- a major source of complaints by local businessmen.
Armenia's macroeconomic performance, which has still not had a serious impact on living standards, was also praised recently by the World Bank, its number one creditor. A statement by the bank described it as "exemplary."
Khachatrian welcomed the donors' endorsement of his government's economic track record. He also announced that the government has decided to seek another three-year credit from the IMF despite the dram's dramatic strengthening against the U.S. dollar and Armenia's own hard currency reserves approaching $500 million.
"We will implement another three-year [IMF] program," he said. "A political decision has already been taken."
In an interview with RFE/RL last week, Khachatrian predicted that the Armenian growth will somewhat slow down but remain strong in the coming years.